Japan’s industrial production decreased and the unemployment rate unexpectedly climbed in October, lifting bond prices and providing early signs that the country’s economy will likely shrink this quarter.
Factory output declined 1.8 percent from September, the sharpest drop since February 2009, the Trade Ministry said in Tokyo today. The jobless rate increased to 5.1 percent from 5 percent and the economy lost 180,000 jobs from a year earlier, the most since May, according to the statistics bureau.
The figures add to evidence that Japan’s economy may contract for the first time in five quarters, weighed down by the expiration of government stimulus measures and weak exports. While the economy may pick up next year, the Bank of Japan will likely continue to face pressure to keep monetary policy easy as demand remains sluggish.
“This quarter and the next will be the bottom for the economy,” said Takuji Aida, a senior economist at UBS AG in Tokyo. “This quarter we’ll see a contraction, and next quarter we’ll see growth around 1 percent. After that, we still won’t see anything strong, but we’ll see a gradual acceleration of growth.”
Japan’s real gross domestic product is expected to shrink at a 0.9 percent annualized pace in the three months through December, according to a survey of 42 economists by the Japanese government-affiliated Economic Planning Association.
Bonds Rise
Yields on Japan’s five-year government debt fell two basis points to 0.44 percent as of 9:55 a.m. in Tokyo after the release of the figures. The yen traded at 84.23 against the dollar at 10:17 a.m. in Tokyo, little changed from 84.27 before the unemployment report was released. The currency has gained more than 10 percent this year, threatening the value of companies’ overseas earnings.
Figures released last week showed exports grew at the slowest pace this year. Toyota Motor Corp. is among automakers scaling back output after a government subsidy program for fuel- efficient cars
ended in September, a factor that together with a stronger yen threatens profits.
Industrial production fell for a fifth month in October, after decreasing 1.6 percent in September. The median estimate of 25 economists surveyed by Bloomberg News was for a 3.2 percent decline.
Consumers rushed to buy vehicles before the end of the government’s subsidy program, helping the nation’s economy grow at a 3.9 percent annual pace last quarter.
Auto Output Falls
Toyota Motor, the world’s biggest automaker, said last week that its domestic vehicle production fell for a second month in October. Honda Motor Co. and Nissan Motor Co., Japan’s second and third largest automakers, also cut their domestic output.
Japan’s shipments of rolled-aluminum products increased at a slower pace last month than September as demand from the auto industry weakened after the government ended the subsidy program.
Exporter earnings are also under threat from the yen’s appreciation. Nikon Corp., the Japanese maker of cameras, lenses and chip-making equipment, this month cut its full-year operating profit and revenue forecasts, citing a stronger yen. The company revised its assumptions for the currency’s exchange rate to the dollar to 80 yen for the six months from Oct. 1, from 90 yen projected three months ago.
More Jobs
In one encouraging sign for hiring, there were 93 newly advertised jobs in October for every 100 people who started looking for work that month, the most since 2008, the Labor Ministry said in a separate report today. Economists consider it a leading indicator for employment. The job-to-applicant ratio climbed to 0.56, meaning there were 56 job openings for every 100 candidates.
As for production, manufacturers said they plan to increase output 1.4 percent in November and boost production 1.5 percent in December, a government survey included in today’s report showed.
The Japanese parliament passed on Nov. 26 an extra budget to fund a stimulus package aimed at fighting deflation and combating the stronger yen. To foster growth, the Bank of Japan last month cut its benchmark interest rate and created an asset- purchase fund.
Tuesday, November 30, 2010
PM to announce projects under ETP to boost oil and gas sector
Prime Minister Datuk Seri Najib Tun Razak is set to announce several new developments and entry point projects (EPPs) under the Economic Transformation Programme (ETP) today which will boost the oil, gas and energy sector.
Oil and gas analysts said the announcements could either include the awarding of big contracts, discovery of new oil finds or a new oil and gas policy.
Petroliam Nasional Bhd (Petronas), the government-owned oil and gas company, did say during its first quarter results briefing last month that it was drawing up a masterplan on its potential growth areas, in line with the ETP's emphasis on the oil and gas sector.
Under the overall ETP, Najib has announced eight early wins last month. Oil, gas and energy under the National Key Economic Areas (NKEAs) targets a 5% annual growth for the sector from this year to 2020. This target translates into an increase of RM131.4bil within a decade.
Under the ETP, there are some 12 EPPs as well as two business opportunities within the oil, gas and energy sector.
The first three EPPs would look at sustaining oil and gas production, which include rejuvenating existing fields through enhanced oil recovery, developing small fields through innovative solution and intensifying exploration activities.
Meanwhile, another two EPPs would look to enhance downstream growth by building a regional oil storage and trading hub and unlocking premium gas demand in Peninsular Malaysia.
Three EPPs are focused on making Malaysia the No. 1 Asian hub for oil and field services, by attracting multinational corporations to bring a sizeable share of their global operations to Malaysia, consolidating domestic fabricators and developing engineering, procurement and installation capabilities and capacity through strategic partnerships and joint ventures.
The final four EPPs look at building a sustainable energy platform for growth by improving energy efficiency, building up solar power capacity, deploying nuclear energy for power generation and tapping Malaysia's hydroelectricity potential.
The EPPs would contribute about RM47.1bil to gross national income to meet 2020 targets. An additional RM61.2bil would come from business opportunities and baseline growth.
(Source: The Star Online)
Oil and gas analysts said the announcements could either include the awarding of big contracts, discovery of new oil finds or a new oil and gas policy.
Petroliam Nasional Bhd (Petronas), the government-owned oil and gas company, did say during its first quarter results briefing last month that it was drawing up a masterplan on its potential growth areas, in line with the ETP's emphasis on the oil and gas sector.
Under the overall ETP, Najib has announced eight early wins last month. Oil, gas and energy under the National Key Economic Areas (NKEAs) targets a 5% annual growth for the sector from this year to 2020. This target translates into an increase of RM131.4bil within a decade.
Under the ETP, there are some 12 EPPs as well as two business opportunities within the oil, gas and energy sector.
The first three EPPs would look at sustaining oil and gas production, which include rejuvenating existing fields through enhanced oil recovery, developing small fields through innovative solution and intensifying exploration activities.
Meanwhile, another two EPPs would look to enhance downstream growth by building a regional oil storage and trading hub and unlocking premium gas demand in Peninsular Malaysia.
Three EPPs are focused on making Malaysia the No. 1 Asian hub for oil and field services, by attracting multinational corporations to bring a sizeable share of their global operations to Malaysia, consolidating domestic fabricators and developing engineering, procurement and installation capabilities and capacity through strategic partnerships and joint ventures.
The final four EPPs look at building a sustainable energy platform for growth by improving energy efficiency, building up solar power capacity, deploying nuclear energy for power generation and tapping Malaysia's hydroelectricity potential.
The EPPs would contribute about RM47.1bil to gross national income to meet 2020 targets. An additional RM61.2bil would come from business opportunities and baseline growth.
(Source: The Star Online)
Monday, November 29, 2010
Capital Market Masterplan will address private pension fund, other issues - (Source: The Star Online)
PETALING JAYA: The second Capital Market Masterplan (CMP2) for Malaysia from 2011 to 2020, which is expected to be released before year-end, will address key areas such as the development of a private pension fund framework, boosting retail participation in the local stock market, working capital improvement and higher attention to governance.
Securities Commission (SC) market supervision managing director and executive director Datuk Ranjit Ajit Singh said that having a voluntary private pension fund system was a very important aspect of the agenda.
One of the things we've been working with the Government very closely is the development of the private pension fund framework. From the perspective of helping to build a number of institutions that will have pools of capital available to invest in the marketplace, it is a very important aspect, he told StarBiz.
If you look at any of the major countries that have successfully developed their capital markets after a certain point in time to reflect domestic demand side, it has been on the back of significant reforms in the pension systems that had occurred.
Ranjit, who was one of the participants at a recent roundtable discussion organised by StarBiz, stressed that the proposed pension system would be strictly voluntary and not touch on the mandatory system under the Employees Provident Fund.
He also said efforts would be made to encourage more retail participation into the local stock market.
For this to occur, there is a view that you need to be able to look towards not only types of products, but also the types of services that the broker dealers and other intermediaries can offer, for example a much higher Internet-based approach, if the broker wants to do that, should be facilitated.
So (there are) a lot of opportunities for more business models to be developed to bring in more participation, said Ranjit.
He also said the SC would like to see more risk taking occurring within the capital market.
We need to move away from an environment of risk avoidance to risk management and create more opportunities for a certain amount of products and investment styles that allow a little bit more of risk taking to occur within the capital markets.
That's why we have taken a view that we will continue in the path towards the liberalisation of the derivatives market, whether it's in the area of short-selling or in the area of allowing a greater degree of products available for the derivatives market to develop.
Ranjit said the capital market not only provided foreign investment opportunities but also to facilitate capital formation for Malaysian companies.
For that to exist, the capital markets must be able to offer an opportunity not just for the large companies in Malaysia but also those throughout the spectrum and therefore building up the venture capital equity sort of environment I think requires a lot more effort.
This will be a very important focus area moving forward, he said.
From the standpoint of skills, Ranjit said human capital and information infrastructure development is also very important.
You cannot aspire to become a developed market if you do not have the skills and talents available. Therefore, that is a very important aspect of what we will do as well.
And I think while we do all this, we need to ensure that governance gets the requisite attention and therefore, (looking at governance) looking at the ability of the markets to withstand shocks, is very important, he said.
Ranjit said that despite the severe shocks that the global financial system went through, Malaysia remained resilient.
As we go further, we don't want to lose sight of the fact that we also want a certain degree of resiliency to be present in the market.
A certain level of Government arrangements that are balanced, in terms of assuring that there isn't undue regulatory burden but at the same time investor protection and corporate governance requirements are in place to be able to ensure that investors and issuers will gravitate to markets which
have quality regulation, he said.
The SC introduced the first CMP in 2001. It was designed to be a comprehensive plan mapping the direction of the Malaysian capital market for 10 years (2001 to 2010).
The first CMP was intended to ensure that the capital market was well positioned to support national economic growth and to meet future challenges from regional competition and globalisation.
It detailed the vision, objectives and strategic initiatives for the Malaysian capital market to successfully meet future challenges.
Securities Commission (SC) market supervision managing director and executive director Datuk Ranjit Ajit Singh said that having a voluntary private pension fund system was a very important aspect of the agenda.
One of the things we've been working with the Government very closely is the development of the private pension fund framework. From the perspective of helping to build a number of institutions that will have pools of capital available to invest in the marketplace, it is a very important aspect, he told StarBiz.
If you look at any of the major countries that have successfully developed their capital markets after a certain point in time to reflect domestic demand side, it has been on the back of significant reforms in the pension systems that had occurred.
Ranjit, who was one of the participants at a recent roundtable discussion organised by StarBiz, stressed that the proposed pension system would be strictly voluntary and not touch on the mandatory system under the Employees Provident Fund.
He also said efforts would be made to encourage more retail participation into the local stock market.
For this to occur, there is a view that you need to be able to look towards not only types of products, but also the types of services that the broker dealers and other intermediaries can offer, for example a much higher Internet-based approach, if the broker wants to do that, should be facilitated.
So (there are) a lot of opportunities for more business models to be developed to bring in more participation, said Ranjit.
He also said the SC would like to see more risk taking occurring within the capital market.
We need to move away from an environment of risk avoidance to risk management and create more opportunities for a certain amount of products and investment styles that allow a little bit more of risk taking to occur within the capital markets.
That's why we have taken a view that we will continue in the path towards the liberalisation of the derivatives market, whether it's in the area of short-selling or in the area of allowing a greater degree of products available for the derivatives market to develop.
Ranjit said the capital market not only provided foreign investment opportunities but also to facilitate capital formation for Malaysian companies.
For that to exist, the capital markets must be able to offer an opportunity not just for the large companies in Malaysia but also those throughout the spectrum and therefore building up the venture capital equity sort of environment I think requires a lot more effort.
This will be a very important focus area moving forward, he said.
From the standpoint of skills, Ranjit said human capital and information infrastructure development is also very important.
You cannot aspire to become a developed market if you do not have the skills and talents available. Therefore, that is a very important aspect of what we will do as well.
And I think while we do all this, we need to ensure that governance gets the requisite attention and therefore, (looking at governance) looking at the ability of the markets to withstand shocks, is very important, he said.
Ranjit said that despite the severe shocks that the global financial system went through, Malaysia remained resilient.
As we go further, we don't want to lose sight of the fact that we also want a certain degree of resiliency to be present in the market.
A certain level of Government arrangements that are balanced, in terms of assuring that there isn't undue regulatory burden but at the same time investor protection and corporate governance requirements are in place to be able to ensure that investors and issuers will gravitate to markets which
have quality regulation, he said.
The SC introduced the first CMP in 2001. It was designed to be a comprehensive plan mapping the direction of the Malaysian capital market for 10 years (2001 to 2010).
The first CMP was intended to ensure that the capital market was well positioned to support national economic growth and to meet future challenges from regional competition and globalisation.
It detailed the vision, objectives and strategic initiatives for the Malaysian capital market to successfully meet future challenges.
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